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The market for initial public offerings showed definite signs of life in the second quarter, but has it broken out of two and a half years of lethargy?

Globally, deal volume rose slightly from a year ago to 103, and the aggregate dollars raised increased to $37 billion from $10 billion for the same period last year. The half-year deal counts stands at 203, which already exceeds 2009’s full-year count of 178, according to Renaissance Capital’s 2nd Quarter Global IPO Review.

In the United States, the story was much the same. Thirty-seven deals priced in the second quarter, the most since the fourth quarter of 2007. That pushed the half-year total to 64, one more than for all of 2009. Proceeds rose to $4.9 billion, a near-threefold increase year over year, but well off the recent high of $13 billion in 2009’s fourth quarter.

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Asia Pacific led all regions with $19.9 billion in proceeds raised, and Europe was second at $10.2 billion. The two top deals were from life insurance firms, Samsung Life (Korea) and PZU (Poland). No U.S. issuances made the top 10.

Investors are still cautious, pressing first-time public-equity issuers for discounts. In the second quarter more than half of U.S. IPOs priced below the proposed range, with 73% coming in below the midpoint, reports Renaissance Capital. But even with the lower valuations, aftermarket performance was poor: on average, IPOs in the second quarter fell 8.5% from their offering price. (Globally, the average IPO rose 2% from its offering price.) In addition, 13 U.S. IPOs were postponed in the second quarter, up from six in the prior period, and eight companies withdrew their offerings completely.

The widespread discounting signals that many first-time issuers lack the luxury of time — they are choosing to issue at a lower price and bank the funds now rather than wait it out. When market conditions are uncertain after a company files for an IPO, “the firm has two options: postpone, or lower the offering price,” says Michelle Lowry, associate professor of finance at Penn State University’s Smeal College of Business. “The reality is, of firms that cancel their IPO, less than 20% go public. And if you postpone now, market conditions three months from now could be even worse.”

The U.S.’s best-performing IPO, as of the end of the second quarter, was Tesla Motors (NASDAQ:TSLA). The manufacturer of electric cars debuted June 29 and raised $226 million. While the shares rocketed 40% in the aftermarket, they swooned in the early days of July, falling 2% below the offering price as of Wednesday. Analysts attributed the move to investors’ returning to reality about the Tesla’s financial prospects. The seven-year-old company has yet to post a profit.

Indeed, almost two-thirds of the IPOs that came to market in the second quarter were trading below their offering price at market close on Wednesday, with many off 20% to 40%.

The poor performance relates very closely to the overall uncertainty in the market, says Lowry. “IPOs mirror the overall market, but there is so much more volatility,” she says. “We’ve got an economy that doesn’t know whether it is up, down, or sideways.” While newly public companies may raise a lot of cash, they are very reliant on new investment opportunities panning out. If the economic recovery doesn’t take hold, the prospects of success diminish, says Lowry.

Meanwhile, the pipeline for new IPOs is bulging as venture-backed U.S. companies thirst for liquidity and private equity firms look for exits. Seventy-six new filers entered the U.S. IPO pipeline in the second quarter, swelling its ranks to 153, a potential $35 billion of new equity issuance, says Renaissance Capital. (That does not include a potential offering of as much as $20 billion from General Motors.)

The largest U.S. deals being contemplated are hospital operator HCA, media-measurement firm Nielsen, NXP Semiconductors (a spin-off of Philips), and private equity firm Kohlberg Kravis Roberts. These four deals are each estimated to generate $1 billion or more. But so far in 2010, the United States has not produced a deal larger than $600 million, Renaissance Capital notes. Liberty Mutual, Toys R Us, Booz Allen Hamilton, and Zipcar also wait in the wings.

“The mounting backlog of IPO hopefuls gives us confidence that we are indeed on the verge of a very robust cycle for IPOs,” Renaissance Capital says in its report.